December 12th - 2010

Over half of Ontarians confused about HST and resale homes

A full 56 percent of Ontarians mistakenly believe that the new Harmonized Sales Tax (HST) applies to the full purchase price of a resale home, according to an Ipsos Reid survey commissioned by the Ontario Real Estate Association (OREA).

A full 56 percent of Ontarians mistakenly believe that the new Harmonized Sales Tax (HST) applies to the full purchase price of a resale home, according to an Ipsos Reid survey commissioned by the Ontario Real Estate Association (OREA).

“We see it on the front lines every day. Clearly, Ontarians still don’t know what the HST covers and what is exempt,” says Dorothy Mason, President of OREA. “This is not helping the housing market, and it’s not helping the Ontario economy. This confusion means that many buyers think the cost of a resale home is tens of thousands of dollars higher than it actually is.”

OREA is working to create as much awareness as possible among consumers about the reality of the HST and resale homes. For example, a press release sent out following the survey was picked up by many news outlets across the country and reached 5.5 million Canadians - an indication of the level of interest about the issue. But OREA would like the government to take some responsibility for educating potential home buyers as well. “We’re doing our part to inform our clients, but we shouldn’t have to do it alone. We’re calling on the Ontario government to launch an immediate public awareness campaign to educate taxpayers and end the HST confusion,” concluded Dorothy Mason. “For average homebuyers, learning that the HST does not apply to the full purchase price means a $40,000 saving they weren’t expecting.”

HST and resale homes – the facts
The HST is only levied on the various transaction fees associated with the purchase of a home that has been previously occupied (i.e. not a newly-built home).

Currently, the average price of an Ontario resale home is around $330,000. Therefore, this confusion leaves the majority of Ontarians wrongly believing that the HST will add more than $40,000 to the transaction cost. There is growing concern among real estate professionals that this misperception about the HST is dampening the Ontario housing market.

The results of the survey were consistent across all age groups. However, there were some differences across other demographic categories. For instance, of those surveyed half of the university graduates, 71 percent of northern Ontarians, 59 percent of those living in eastern and southwestern Ontario, and 54 percent of GTA residents all mistakenly believe the HST applies to the full purchase price of resale homes.

Ipsos Reid conducted the survey among 830 Ontarians from Ipsos’s online panel, between October 4th and 11th, on behalf of the Ontario Real Estate Association. The estimated margin of error is /-3.8 percentage points, 19 times out of 20.

For more information about the HST survey as well as an OREApedia topic and Government Relations issue summary on the HST, visit www.orea.com.

HST highlights

  • The HST came into effect in Ontario on July 1, 2010.
  • Purchasers of newly constructed homes under $400,000 are not subject to the additional tax burden.  Buyers of new homes valued between $400,000 and $500,000 could claim a proportional rebate on the provincial portion of the HST up to a maximum of $24,000.
  • The new rental housing rebate is similar to the enhanced new housing rebate, for new residential rental properties.
  • HST is not applicable to the sale of a residential re-sale home.
  • Real estate commissions are subject to the 13 per cent HST.
  • Lawyer's fee will also be subject to the 13 per cent HST, as will the cost of a Condominium Status Certificate, although the total certificate cost will remain at $100.
  • Moving costs, the cost of a home inspection and even home staging will also be subject to HST.

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For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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